Options Playbook Radio

Mark and Brian are back to answer listener questions.

  • Question from Ejh4isu - Let's say you're short naked a bunch of puts and the trade goes against you, and you don't have the money to pony up? What can your broker do?
  • Question from LCB - This is a challenging time to sell options due to low volatility. So does it stand that the opposite is true? Is it a good time to buy options? Particularly protective puts?
  • Question from Andrew Lane - I tried searching for options on the major advisor news sources including Pensions & Investments and Financial Advisors magazine and came up blank. Why do these mainstream outlets ignore this space? Where should I go to learn more about options for advisors?
Direct download: OptionsPlaybookRadio180.mp3
Category:financial podcast -- posted at: 1:46pm CDT

It's time to tackle listener questions again on Options Playbook Radio. In this episode, Mark and Brian cover:

  • Question from Albert Deckel - First, I want to thank you for all the effort you place into the options playbook. I find your lessons absolutely clear, understandable and instructive....a rare combination!! I bought your book and find that, also, clear and concise and very informative. Two questions: While I understand how to convert a "Delta" into meaning, I really don't understand what consists of a "high" vs. "low" Gamma, Theta or Vega. For example, when is theta so high that it makes the purchase of an contract dubious, or Vega so high that it makes the purchase of an OTM contract desirable? Also, if I were to write an ITM put, what combination of Delta, Gamma, Theta or Vega am I looking for? Thanks so much!! Al
  • Question from Tim - Why isn't it standard or maybe required to let people close out shorts for free below $.10?
Direct download: OptionsPlaybookRadio179.mp3
Category:financial podcast -- posted at: 3:38pm CDT

We are continuing the discussion of options pricing. This week we take a deep dive into pricing of a butterfly.

Specifically:

  • Looking at a 10-day butterfly in AAPL
  • Picking a five-point spread
  • What strikes and expirations to choose?
  • What will this cost?
  • What is the maximum risk and reward?
  • What do we want to happen?
  • What impacts the pricing of butterflies?
  • Managing expectations
  • Looking at the same thing for a November 17 expiration
  • What is the ideal scenario?
Direct download: OptionsPlaybookRaido178.mp3
Category:financial podcast -- posted at: 1:44pm CDT

Today Brian is covering a short call spread (which is bearish) on AAPL. All of this applies on the put side, but in this episode, calls are being featured.

Specifically:

  • What dynamics do you need to think about when trading short spreads?
  • Look at the most at-the-money straddle to get an idea about pricing
  • Example 1: November 17 expriation; 52 days out
    • Selecting strikes
    • What will this cost?
    • What is the max risk? Reward?
  • Example 2: October 6 expiration; 10 days out
    • Selecting strikes
    • What will this cost?
    • What is the max risk? Reward?
  • Which would you choose?
  • How to close out the trade?
  • How to roll the trade?

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio177.mp3
Category:financial podcast -- posted at: 1:01pm CDT

In this episode, Brian explores long spreads. Specifically, long call spreads and long put spreads. These can be found on pages 60 and 62, respectively, of The Options Playbook. This is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

Details include:

  • The dynamics of spread trading
  • Using AAPL as an example
  • What to consider regarding forecasting and timing
  • The value of the spread does not provide quick rewards
  • Selecting strikes
  • What is the maximum risk?
  • What is the maximum reward?
  • Always look at how much time premium you have

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio176.mp3
Category:financial podcast -- posted at: 1:38pm CDT

In this episode, Brian covers:

  • Using a pricing calculator to review different scenarios
  • Buying an out-of-the-money option
  • What happens to delta?
  • Looking at probability
  • When time is your ally
  • When to buy an out-of-the-money option
  • How to get low time premium
  • Closer to expiration = higher delta
  • What about at-the-money options?
  • When to buy, and when not to
Direct download: OptionsPlaybookRadio175.mp3
Category:general -- posted at: 4:03pm CDT

 

Last week, we started the back to the basics with the Greeks. You can find an entire chapter on Greeks in The Options Playbook. This is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

In this episode, Brian discusses:

  • Looking at probability using a 90-day option as an example
  • What is the probability of an $8 move in a $60 stock in 90 days?
  • Where do you think the option will be trading at in 90 days?

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio174.mp3
Category:general -- posted at: 5:01pm CDT

Now that earnings season is over it's time to get back to basics: the Greeks. You can find an entire chapter on Greeks in The Options Playbook. This is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

In this episode:

  • A review of last time
  • Using the Greeks
  • What does a delta do?
  • Meet the Greeks in The Options Playbook
  • As expiration approaches, what happens to delta? For that, you need gamma
  • What about theta?
  • Delta when a contract is in-, at- or out-of-the-mooney
  • Delta moves slower than other Greeks
  • You can't have slow time decay on a fast moving option

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio173.mp3
Category:financial podcast -- posted at: 4:25pm CDT

With MRVL still to announce earnings, it might be interesting to look at a long call spread in the name. You can find this on page 60 of The Options Playbook. This is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

In this episode:

  • A review of last time
  • MRVL announces earnings on 8/24 after the close
  • What is the outlook for MRVL
  • Selecting the expiration
  • What is the most at-the-money strike?
  • Buying as much time premium as selling
  • What is maximum risk? Reward?
  • Selecting a different expriation
  • What is maximum risk? Reward?
  • Why does one trade cost more than the other?
  • Time premium caveats

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio172.mp3
Category:financial podcast -- posted at: 3:02pm CDT

Since it's still earnings, season we are going to continue to look at expensive stocks. Today's subject is Alibaba (BABA), and we are exploring a backspread. You can find backspreads in The Options Playbook. This is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

The details:

  • The difference bewteen a skip-strike butterfly and a backspread
  • What do we want to happen?
  • Why a backspread over a skip-strike butterfly?
  • Earnings-related considerations
  • What is the marketplace expecting after the earnings?
  • Selecting strikes
  • What will this cost?
  • What is the timeframe?
  • And more...

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio171.mp3
Category:general -- posted at: 2:26pm CDT